The analysis, published in the July issue of Which?, points out that, contrary to “industry hype”, millions of people are now set to receive a reduced retirement income.

In some cases, Which? says, people may be heading for just 40 per cent of what they would have received if they’d stayed with the state scheme.

The additional state pension is paid on top of the basic state pension to employees who have paid enough National Insurance contributions. However, during the 80s and 90s people were enticed out of Serps by financial windfalls of up to £7,000, paid for by the Government.

The research found that poor stock market performance, coupled with high policy charges, have eaten into the value of investments, and falling annuity rates mean funds buy smaller pensions when people retire.

The level of pension workers receive if they contracted out depends on age, sex, and on past and future investment growth.

Using a series of four different scenarios, Which? compared rates between different providers and the state scheme and found that someone who contracted out aged 25 in 1989 would be unlikely to benefit from leaving Serps. However, the picture is even less optimistic for someone who was 35 in 1989.

Which? writes, “Many people may have been advised to contract out by a financial adviser. Advisers should have checked their client’s earnings, any employer’s scheme open to them, their age and, crucially, their attitude to investment risk, making it clear the private pension policy used to contract out could provide a lower pension than the additional state scheme. If this didn’t happen, people may have been mis-sold.”

The group has provided a factsheet for anybody who suspects they may have been mis-sold, with details about what the next step should be.

Helen Parker, editor of Which?, commented on the findings, “While we’re not saying opting out was a mistake for everyone, our analysis shows that millions of people may well have been better off staying in the government scheme.”